WORTHINGTON PUMP INDIA LTD. Vs. AQUADEV INDIA LTD.

JUDGEMENT

(1.) This is an application under sections 433(e), 434 and 439 of the Companies Act, 1956, for winding up of the respondent-company.

(2.) The case of the petitioner-company in brief is that the respondent-company through its sister concern, M/s Cauvery Marketing Company, Vijayawada, had placed an order for supply of 10 numbers of Worthington vertical pumps for its aqua project coming up at Ongole, Prakasam District, for the ultimate customer of M/s Aquadev India Limited, the respondent-company. The price of the Worthington vertical pumps was Rs. 33,09,800 after a discount of 5%. The petitioner-company was paid Rs. 2,00,000 as advance on two purchase orders each totalling Rs. 4,00,000. It is further alleged that the Worthington vertical turbine pumps had been ordered for the use of the respondent-company made on particular specifications of the respondent using special material for the use in saline water with special protective measures against corrosion in saline water which can be used only by the respondent Aqua Farm and none else. Two such pumps worth Rs. 6,11,600 were despatched on 19.6.1995, one such pump worth Rs. 3,05,800 was despatched on 30.6.1995 and in third consignment, three such pumps were despatched on 14.6.1995, the value of which is Rs. 8,28,480. Thus 6 pumps worth Rs. 17,45,000 were despatched by 30.6.1995 through the carrier M/s. Road Transport Corporation of India and the documents were sent through bank to enable the respondent to remit the value of the consignment. The petitioner-company had also completed manufacture of the balance 4 worthington vertical pumps and raised their invoices for supply. But they were requested not to supply the remaining pumps by the respondent-company on the ground that their bankers had not yet released the funds, therefore, the petitioner-company did not supply specially manufactured pumps which were lying in the stock yard of the petitioner-company. It is further alleged that the respondent-company did not clear and release the consignment of six pumps already supplied. On demand, the respondent-company requested to extend time for payment till 31.10.1995 for clearing whole order of 10 pumps. On every reminder sent by the petitioner-company, the respondent-company pleaded its inability to pay and sought further extension of time for payment. The last of such request made by the respondent-company was in the month of March, 1996. The petitioner-company had to pay Rs. 1,93,050 being the freight and demurrage charges raised by the transport company for the goods lying in the transport company godown. The respondent-company had paid only Rs. 4,00,000 against a sum of Rs. 33,09,800 leaving the balance of Rs. 29,09,800 as also a sum of Rs. 1,93,050 being the freight and demurrage charges. The transport-company had returned the six pumps in damaged condition to the petitioner company. Therefore, the petitioner-company served statutory notice to the respondent-company, but it neither complied with nor replied to the said notice.

(3.) The respondent-company through its counter denied its liability to pay any amount to the petitioner-company. It is pleaded that the respondent-company had placed an order for supply of ten Worthington vertical pumps and ten motors on M/s Cauvery Marketing Company, Vijayawada, on 5.10.1994 and the required materials have 'to be supplied by the above M/s Cauvery Marketing Company. The respondent-company had not entered into any agreement directly with the petitioner-company. The respondent-company had placed an order of particular specifications in the manufacture of pumps which can be used for saline water not only by the respondent-company, but also for the aqua farms which would draw sea and saline water. The respondent-company denied that the materials referred [to] in three invoices by the petitioner had not been sent to the company's site located at Eethamukala village, Kothapatnam Mandal, Prakasam District, and the materials were stationed at M/s Transport Corporation of India's office at Vijayawada branch, which is about 150 kms. away from the work site of the respondent-company. According to the terms and conditions of the purchase order, dated 5.10.1994, placed with M/s Cauvery Marketing Company, Vijayawada, the materials had to be delivered, on door delivery basis. Therefore, M/s Cauvery Marketing Company had contravened the conditions stipulated in the purchase order. It is alleged that as per condition No. 6, the materials had to be inspected by the respondent-company before they are ready for delivery. M/s Cauvery Marketing Company had supplied part of the materials without inspection of the materials by the respondent-company and hence the materials prepared cannot be accepted by the respondent-company, because the petitioner had not given any opportunity to inspect the materials by it before it was ready for delivery. The respondent-company is not liable to pay the amounts claimed because M/s Cauvery Marketing Company committed breach of conditions. The petitioner-company is not entitled to claim for payment of freight and demurrage charges levied by the transport company, because goods were not delivered at the site situated in Eethamukkala village, Kothapatnam Mandal, Prakasam District. The petitioner-company had knowledge that the funds sanctioned by the bank for the project requirement have not been released. The employees of the respondent-company did not cooperate in day-to-day administrative affairs and therefore, the respondent-company has not sent reply to the statutory notice. The respondent company has filed a petition before the National Consumer's Forum, New Delhi, for the release of the loan amounts against the orders of the consortium banks, i.e., State Bank of India, State Bank of Hyderabad etc., because they had refused for disbursement of the sanctioned loans to the respondent-company. It is alleged that the respondent-company neither refused nor neglected to pay the debt to the petitioner-company. Because the respondent company was prepared to pay the outstanding amount due as and when the loans received by it as also after verification of the specification of the material manufactured by the petitioner-company as per condition No. 6 of the purchase order, dated 5.10.1994. It is pleaded that there was no agreement with the petitioner-company by the respondent-company and actually, agreement was executed by it with M/s Cauvery Marketing Company. It is lastly alleged that there is bona fide dispute for the debt and as also breach of contract and, therefore, the application for winding up of the respondent-company is liable to be dismissed.